At what age should you write your will?
A 78-year-old man, in good health, is driving home when he is hit and killed by a drunk driver. He has had a will in place since he was 40 years old. He left full instructions for his wife on how much to spend on his burial. He also made detailed provisions on how his money would be divided among his four children and three grandchildren.
A 20-something hip-hop artist just signs a major multi-million-dollar recording deal. Feeling full of brag and swag, he heads for Vegas, and as the saying goes — what happens in Vegas stays in Vegas. Only in this case, what happened was a brawl that led to bullets and his premature death. He had no will, so the recording company takes back the millions he would have earned.
Whether you’re a millionaire or thousand-aire, it is important that you take control and write your will. Seven out of 10 Americans die “intestate,” meaning without a will. Each state has its own rules regarding the distribution of property as well as laws that dictate what constitutes the elements of a valid will. Just like any other area of financial planning, knowing the basics can go a long way.
Unfortunately, most of us don’t. None of us know when we’ll leave this earth. And our wishes and decisions will have to be carried out by others.
A will is a document that transfers your property at your death to designated persons. It is revocable, which means that it is subject to change until your death. It becomes effective only upon your death. The goal of your will is to distribute your property to whom you wish, including your home, personal belongings and money.
The executor is charged with a fiduciary duty to carry out the terms and conditions of the testator’s will as well as settle all debts. The role of your executor will be shaped by the size and complexity of your estate.
Being an executor or executrix is a job, which requires competency and some financial knowledge. Upon the death of the testator, the executor will have to take an inventory of and collect assets, pay debts and taxes, and manage assets.
You become the “testator” if you are a man, or the “testatrix” if you are a woman and the author your will. You must be of sound mind and of majority age in your state. You must declare it to be your “last will and testament.” In most cases it must be in writing and signed by you, along with two witnesses. It should be revised when you have a change in your family situation like a birth or a divorce, or when there is a change in the tax law. It is essential to name a personal representative, who is known as an “executor” or “executrix.”
You should also be aware of possible taxes when preparing your will. If you leave a large estate to someone other than you spouse, our government will collect taxes on the assets. The executor will have to file the will in probate court. However, in many states, there are small estate provisions, when the amount and value of your estate is typically less than $25-$50,000. Small estates typically avoid having to go through probate court, but you must check your laws to confirm whether this applies in your State. If you have a large estate, it is advisable to seek counsel from your lawyer and tax preparer to lessen tax burdens.
There are several affordable software programs that you can purchase to prepare your will yourself. Most are easy-to-follow and have step-by-step instructions. Once you have your will prepared, you can meet at your bank and bring your witnesses with you. Have the banker notarize the will to make it official.
Remember — you can change your will whenever you wish. Let your executor know where the will is located, such as in a bank safe deposit box or in the care of your attorney.
Make sure that your money and your belongings are written so as to be distributed according to your wishes. Do not leave room for arguments or confusion. Everyone knows how these things can destroy relationships for years. Having your affairs in order is a task that you should not put off, no matter what your age.